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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-QSB

Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

For The Quarterly Period Ended September 30, 2007

Commission File Number: 0-52589

ANCHOR FUNDING SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5456087
(State of jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

10801 Johnston Road suite 210

Charlotte, NC

(Address of Principal Executive Offices)

28226

(Zip Code)

(866) 789-3863

(Registrant's telephone number)

Not Applicable

(Former name, address and fiscal year, if changed since last report)

_________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of November 16, 2007, the registrant had a total of 11,820,555 shares of Common Stock outstanding, excluding 1,342,500 outstanding shares of Series 1 Preferred Stock convertible into 6,712,500 shares of Common Stock.

ANCHOR FUNDING SERVICES, INC.

Form 10-QSB Quarterly Report

Table of Contents

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheet as of September 30, 2007 and Audited Consolidated Balance Sheet as of December 31, 2006	3

	Unaudited Consolidated Statements of Operations for the Three and Nine months Ended September 30, 2007
	and 2006	4

	Unaudited Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2007	5

	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and
	September 30, 2006	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Controls and Procedures	33

PART II.	OTHER INFORMATION	33

Item 1.	Legal Proceedings	33

Item 2.	Changes in Securities	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Submissions of Matters to a Vote of Security Holders	33

Item 5	Other Information	33

Item 6.	Exhibits and Reports on Form 8-K	34

Signatures		35

PART I. FINANCIAL INFORMATION

ANCHOR FUNDING SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS
	(Unaudited)			(Audited)
	September 30, 2007			December 31, 2006
CURRENT ASSETS:
Cash	$	4,259,913		$	55,771
Retained interest in purchased accounts receivable		1,194,069			441,255
Earned but uncollected fee income		38,337			10,799
Due from financial institution		2,470			-
Prepaid expenses and other		50,542			41,134
Total current assets		5,545,331			548,959

PROPERTY AND EQUIPMENT, net		78,815			4,010

SECURITY DEPOSITS		19,203			-

	$	5,643,349		$	552,969

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Due to financial institution	$	-		$	44,683
Accounts payable		78,037			39,218
Due to related company		-			21,472
Accrued payroll and related taxes		97,382			37,796
Accrued expenses		12,278			-
Collected but unearned fee income		29,982			11,730
Dividends payable		269,169			-
Total current liabilities		486,848			154,899

COMMITMENTS AND CONTINGENCIES

MEMBERS' EQUITY		-			391,800
PREFERRED STOCK		6,712,500			-
COMMON STOCK		11,795			3,795
ADDITIONAL PAID IN CAPITAL		(780,851	)		4,580
ACCUMULATED DEFICIT		(786,943	)		(2,105	)
		5,156,501			398,070

	$	5,643,349		$	552,969

The accompanying notes to financial statements are an integral part of these statements.

ANCHOR FUNDING SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the quarters ending September 30,						For the nine months ending September 30,

	2007			2006			2007			2006
FINANCE REVENUES	$	121,996		$	109,862		$	297,740		$	519,335
INTEREST EXPENSE - financial institution		(5,866	)		(14,760	)		(27,231	)		(120,564	)
INTEREST INCOME		56,823			-			154,352			-
INTEREST EXPENSE, net - related parties		-			(20,758	)		-			(53,229	)

NET FINANCE REVENUES		172,953			74,344			424,861			345,542
PROVISION FOR CREDIT LOSSES		22,000			-			22,000			-

FINANCE REVENUES, NET OF INTEREST EXPENSE
AND CREDIT LOSSES		150,953			74,344			402,861			345,542

OPERATING EXPENSES		380,074			48,078			939,530			152,954

NET INCOME (LOSS) BEFORE INCOME TAXES		(229,121	)		26,266			(536,669	)		192,588

INCOME TAX (PROVISION) BENEFIT:
Current		-			-			-			-
Deferred		4,000			-			21,000			-

Total		4,000			-			21,000			-

NET INCOME (LOSS)		(225,121	)		26,266			(515,669	)		192,588

DEEMED DIVIDEND ON CONVERTIBLE PREFERRED STOCK		(134,849	)		-			(269,169	)		-

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDER	$	(359,970	)	$	26,266		$	(784,838	)	$	192,588

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDER, per share
Basic	$	(0.03	)	N/A			$	(0.07	)	N/A

Dilutive	$	(0.03	)	N/A			$	(0.07	)	N/A

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic and dilutive		11,820,555		N/A				10,912,130		N/A

The accompanying notes to financial statements are an integral part of these statements.

ANCHOR FUNDING SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the nine months ended September 30, 2007

	Members'			Preferred		Common		Additional			Accumulated
	Equity			Stock		Stock		Paid in Capital			Deficit

Balance, December 31, 2006	$	391,800		$	0	$	3,795	$	4,580		$	(2,105	)

To record the exchange of 8,000,000 common shares of BTHC XI, Inc.
stock for 100,000 membership units of Anchor Funding Services, LLC		(391,800	)		-		8,000		383,800			-

To record issuance of 1,342,500 shares of convertible preferred stock
and related costs of raising this capital		-			6,712,500		-		(1,209,383	)		-

To record issuance of 1,970,000 in stock options		-			-		-		40,152			-

Preferred stock dividends		-			-		-		-			(269,169	)

Net loss for the nine months ended September 30, 2007		-			-		-		-			(515,669	)


Balance, September 30, 2007	$	-		$	6,712,500	$	11,795	$	(780,851	)	$	(786,943	)

The accompanying notes to financial statements are an integral part of these statements.

ANCHOR FUNDING SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:	2007			2006
Net income (loss):	$	(515,669	)	$	192,588
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization		10,562			4,386
Provision for uncollectible accounts		22,000			-
Compensation expense related to issuance of stock options		61,152			-
Benefit for income taxes		(21,000	)		-
(Increase) decrease in retained interest in purchased
accounts receivable		(774,814	)		298,884
(Increase) decrease in earned but uncollected fee income		(27,538	)		3,658
(Increase) decrease in prepaid expenses and other		(9,408	)		5,701
Increase in security deposits		(19,203	)		-
Increase in accounts payable		38,819			3,916
Increase (decrease) in collected but unearned fee income		18,252			(14,108	)
(Decrease) increase in due to related company		(21,472	)		213,474
Increase in accrued payroll and related taxes		59,586			7,342
Increase in accrued expenses		12,278			-
Net cash (used in) provided by operating activities		(1,166,455	)		715,841

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(85,367	)		(1,329	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to financial institution, net		(47,153	)		(753,422	)
Repayments on subordinated related party demand notes payable		-			(3,230	)
Proceeds from sale of preferred stock		6,712,500			-
Payments made related to sale of preferred stock		(1,209,383	)		-
Net cash provided by (used in) financing activities		5,455,964			(756,652	)

INCREASE IN CASH		4,204,142			(42,140	)

CASH, beginning of period		55,771			30,240

CASH, end of period	$	4,259,913		$	(11,900	)

The accompanying notes to financial statements are an integral part of these statements.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The Consolidated Balance Sheet as of September 30, 2007, the Consolidated Statements of Operations for the three and nine months ended September 30, 2007 and 2006, the Consolidated Statement of Stockholders’ Equity as of September 30, 2007 and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 have been prepared by us without audit. In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly in all material respects our financial position as of September 30, 2007, results of operations for the three and nine months ended September 30, 2007 and 2006, the Consolidated Statement of Stockholders’ Equity as of September 30, 2007 and the Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2007 and 2006. The results of operations and cash flows for the three and/or nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the full year.

This report should be read in conjunction with our Form 10-SB, as amended.

1.BACKGROUND AND DESCRIPTION OF BUSINESS:

The consolidated financial statements include the accounts of BTHC XI, Inc. and its wholly owned subsidiary, Anchor Funding Services, LLC (“the Company”). In April of 2007, BTHC XI, Inc. changed its name to Anchor Funding Services, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

BTHC XI, Inc. is a Delaware corporation. BTHC XI, Inc. has no operations; substantially all operations of the Company are the responsibility of Anchor Funding Services, LLC.

Anchor Funding Services, LLC is a North Carolina limited liability company. Anchor Funding Services, LLC was formed for the purpose of providing factoring and back office services to businesses located throughout the United States of America.

On January 31, 2007, BTHC XI, Inc acquired Anchor Funding Services, LLC by exchanging shares in BTHC XI, Inc. for all the outstanding membership units of Anchor Funding Services, LLC (See Note 8). Anchor Funding Services, LLC is considered the surviving entity therefore these financial statements include the accounts of BTHC XI, Inc. and Anchor Funding Services, LLC since January 1, 2007.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Revenue Recognition – The Company charges fees to its customers in one of two ways as follows:

1)	Fixed Transaction Fee. Fixed transaction fees are a fixed percentage of the purchased invoice. This percentage does not change from the date the purchased invoice is funded until the date the purchased invoice is collected.

Variable Transaction Fee. Variable transaction fees are variable based on the length of time the purchased invoice is outstanding. As specified in its contract with the client, the Company charges variable increasing percentages of the purchased invoice as time elapses from the purchase date to the collection date.

For both Fixed and Variable Transaction fees, the Company recognizes revenue by using one of two methods depending on the type of customer. For new customers the Company recognizes revenue using the cost recovery method. For established customers the Company recognizes revenue using the accrual method.

Under the cost recovery method, all revenue is recognized upon collection of the entire amount of purchased accounts receivable.

The Company considers new customers to be accounts whose initial funding has been within the last three months or less. Management believes it needs three months of history to reasonably estimate a customer’s collection period and accrued revenues. If three months of history has a limited number of transactions, the cost recovery method will continue to be used until a reasonable revenue estimate can be made based on additional history. Once the Company obtains sufficient historical experience, it will begin using the accrual method to recognize revenue.

For established customers the Company uses the accrual method of accounting. The Company applies this method by multiplying the historical yield, for each customer, times the amount advanced on each purchased invoice outstanding for that customer, times the portion of a year that the advance is outstanding. The customers’ historical yield is based on the Company’s last six months of experience with the customer along with the Company’s experience in the customer’s industry, if applicable.

The amounts recorded as revenue under the accrual method described above are estimates. As purchased invoices are collected, the Company records the appropriate adjustments to record the actual revenue earned on each purchased invoice. These adjustments from the estimated revenue to the actual revenue have not been material.

Retained Interest in Purchased Accounts Receivable – Retained interest in purchased accounts receivable represents the gross amount of invoices purchased from factoring customers less amounts maintained in a reserve account. The Company purchases a customer’s accounts receivable and advances them a percentage of the invoice total. The difference between the purchase price and amount advanced is maintained in a reserve account. The reserve account is used to offset any potential losses the Company may have related to the purchased accounts receivable.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The Company’s factoring and security agreements with their customers include various recourse provisions requiring the customers to repurchase accounts receivable if certain conditions, as defined in the factoring and security agreement, are met.

Senior management reviews the status of uncollected purchased accounts receivable monthly to determine if any are uncollectible. The Company has a security interest in the accounts receivable purchased and on a case-by-case basis, may have additional collateral. The Company files security interests in the property securing their advances. Access to this collateral is dependent upon the laws and regulations in each state where the security interest is filed. Additionally, the Company has varying types of personal guarantees from their factoring customers relating to the purchased accounts receivable.

Management considered approximately $22,000 of their September 30, 2007 retained interest in purchased accounts receivable to be uncollectible. Management did not consider any of their December 31, 2006 retained interest in purchased accounts receivable to be uncollectible.

Management believes the fair value of the retained interest in purchased accounts receivable approximates its recorded value because the majority of these invoices have been subsequently collected.

Property and Equipment – Property and equipment, consisting furniture and fixtures and computers and software, are stated at cost. Depreciation is provided over the estimated useful lives of the depreciable assets using the straight-line method. Estimated useful lives range from 2 to 5 years.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were as follows:

For the nine months ending September 30,

2007		2006

$	151,700	$	48,700



For the quarters ending September 30,

2007		2006

$	64,800	$	17,200

Earnings per Share – The Company computes net income per share in accordance with SFAS No. 128 “Earnings Per Share.” Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. The dilutive impact of convertible preferred stock, stock options and stock warrants were excluded since their impact would have been anti-dilutive. The dilutive effect of stock options and warrants is computed using the treasury stock method, which assumes the repurchase of common shares at the average market price.

Stock Based Compensation until December 31, 2005 - In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123(R), “Accounting for Stock-Based Compensation.” SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires that the fair value of such equity instruments be recognized as an expense in the historical financial statements as services are performed. Prior to SFAS No. 123(R), only certain pro forma disclosures of fair value were required. The provisions of this statement were effective for the first interim reporting period that began after December 15, 2005. The Company adopted the provisions of SFAS No.123(R) in the first quarter of fiscal 2006.

See Note 9 for the SFAS No. 123(R) impact on the operating results for the quarter and nine months ended September 30, 2007. The adoption of SFAS No. 123(R) had no impact on the Company’s operating results for the quarter and nine months ended September 30, 2006.

Recent Accounting Pronouncements –

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of SFAS 157 on its results of operations and financial condition.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (“SAB 108”), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides additional guidance for the quantitative assessment of the materiality of uncorrected misstatements in current and prior years. The assessment for materiality should be based on the amount of the error relative to both the current year income statement and balance sheet. For misstatements originating in prior years that are deemed material to the current year financial statements, SAB 108 permits recording the effect of adopting this guidance as a cumulative effect adjustment to retained earnings. During the fourth quarter of 2006, the Company adopted SAB 108 and it did not have a significant impact on the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115. SFAS 159 provides companies with an option to report selected financial assets and liabilities at estimated fair value. Most of the provisions of SFAS No. 159 are elective; however, the amendment to SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities that own trading and available-for-sale securities. The fair value option created by SFAS No. 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by instrument, (b) is irrevocable unless a new election date occurs, and must be applied to the entire instrument and not to only a portion of the instrument.

SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of the fiscal year, has not yet issued financial statements for any interim period of such year, and also elects to apply the provisions of SFAS No. 157. The Company is currently evaluating the impact of SFAS 157 on its results of operations and financial condition.

In July 2006, FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of SFAS No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in its consolidated financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 became effective for the Company’s on January 1, 2007. The cumulative effect of this change in accounting principle will be recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting FIN 48.

Fair Value of Financial Instruments – The carrying value of cash equivalents, retained interest in purchased accounts receivable, due from/to financial institution, accounts payable and accrued liabilities approximates their fair value.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Cash and cash equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired.

Income Taxes – Effective January 31, 2007, the Company became a “C” corporation for income tax purposes. In a “C” corporation income taxes are provided for the tax effects of transactions reported in the financial statements plus deferred income taxes related to the differences between financial statement and taxable income.

The primary difference between financial statement and taxable income for the Company are compensation costs related to the issuance of stock options and net operating loss carryforwards. The deferred tax asset represents the future tax return consequences of utilizing this net operating loss. Deferred tax assets are reduced by a valuation reserve, when management is uncertain if the net operating loss carryforwards will ever be utilized.

Prior to January 31, 2007, Anchor Funding Services, LLC was treated as a partnership for Federal and state income tax purposes. Its earnings and losses were included in the personal tax returns of its members; therefore, no provision or benefit from income taxes has been included in those financial statements.

3.RETAINED INTEREST IN PURCHASED ACCOUNTS RECEIVABLE:

Retained interest in purchased accounts receivable consists of the following:


	September 30, 2007			December 31, 2006
Purchased accounts receivable outstanding	$	1,502,539		$	614,034
Reserve account		(286,470	)		(172,779	)
Allowance for uncollectible invoices		(22,000	)		-

	$	1,194,069		$	441,255

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Total accounts receivable purchased were as follows:

For the nine months ending September 30,

2007		2006

$	7,561,800	$	9,298,600



	For the quarters ending September 30,

2007		2006

$	3,192,000	$	1,877,900

Retained interest in purchased accounts receivable consists, excluding amounts recorded as uncollectible, of United States companies in the following industries:


	September 30, 2007			December 31, 2006
Staffing	$	671,108		$	397,061
Transportation		(369	)		(52,854	)
Publishing		10,155			45,971
Construction		14,961			26,591
Service		425,891			14,951
Other		94,323			9,535

	$	1,216,069		$	441,255

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

4.PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:


	Estimated
	Useful Lives	September 30, 2007			December 31, 2006
Furniture and fixtures	2-5 yers	$	27,520		$	1,235
Computers and software	3-7 years		74,613			15,531
			102,133			16,766
Less accumulated depreciation			(23,318	)		(12,756	)

		$	78,815		$	4,010

5. DUE FROM/TO FINANCIAL INSTITUTION:

The Company had an agreement with a financial institution under which the institution financed their purchased accounts receivable. The institution received a fee of .3 percent of the receivables financed plus interest as described below. The Company terminated this agreement on July 16, 2007.

Borrowings were made at the request of the Company. The amount eligible to be borrowed was the lower of $1,000,000 or a borrowing base formula as defined in the agreement. The interest on borrowings was paid monthly at a rate ranging from the institution’s prime rate plus 1% to 12.75%.

As of September 30, 2007, the financial institution had collected more cash from previously factored receivables than was loaned to fund current factored receivables. The excess collected is recorded as a receivable from the financial institution.

The agreement was collateralized by all current and future Company assets and was guaranteed by the Company’s majority shareholders.

6.CAPITAL STRUCTURE:

The Company’s capital structure consists of preferred and common stock as described below:

Preferred Stock – The Company is authorized to issue 10,000,000 shares of $.001 par value preferred stock. The Company’s Board of Directors determines the rights and preferences of its preferred stock.

On January 31, 2007, the Company filed a Certificate of Designation with the Secretary of State of Delaware. Effective with this filing, 2,000,000 preferred shares became Series 1 Convertible Preferred Stock. Series 1 Convertible Preferred Stock will rank senior to Common Stock.

Series 1 Convertible Preferred Stock is convertible into 5 shares of the Company’s Common Stock. The holder of the Series 1 Convertible Preferred Stock has the option to convert the shares to Common Stock at any time. Upon conversion all accumulated and unpaid dividends will be paid as additional shares of Common Stock.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The dividend rate on Series 1 Convertible Preferred Stock is 8%. Dividends are paid annually on December 31st in the form of additional Series 1 Convertible Preferred Stock unless the Board of Directors approves a cash dividend. Dividends on Series 1 Convertible Preferred Stock shall cease to accrue on the earlier of December 31, 2009, or on the date they are converted to Common Shares. Thereafter, the holders of Series 1 Convertible Preferred Stock have the same dividend rights as holders of Common Stock, as if the Series 1 Convertible Preferred Stock had been converted to Common Stock. Accrued dividends at September 30, 2007 and December 30, 2006 were $269,169 and $0, respectively.

Common Stock – The Company is authorized to issue 40,000,000 shares of $.001 par value Common Stock. Each share of Common Stock entitles the holder to one vote at all stockholder meetings. Dividends on Common Stock will be determined annually by the Company’s Board of Directors.

The changes in Series 1 Convertible Preferred Stock and Common Stock shares for the nine months ended September 30, 2007 is summarized as follows:


	Series 1 Convertible		Common
	Preferred Stock		Stock
Balance, December 31, 2006		-		3,820,555

Shares issued in exchange for
the membership units of
Anchor Funding Services, LLC		-		8,000,000

Shares issued in connection
with sale of Series 1 Convertible
Preferred Stock		1,342,500		-


Balance, September 30, 2007		1,342,500		11,820,555

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

As of September 30, 2007 and December 31, 2006 the components of additional paid in capital were as follows:

	September 30,			December 31,
	2007			2006
Consideration received in excess of
common stock's par value	$	463,380		$	79,580

Equity issuance fees		(1,347,078	)		(75,000	)

Stock warrants		62,695			-

Stock options, net of $21,000
deferred income tax benefit		40,152			-


	$	(780,851	)	$	4,580

7. RELATED PARTY TRANSACTIONS:

Due from/to Related Company – Prior to December 31, 2006, the Company had borrowing and loan transactions with a limited liability company (LLC) related through common ownership. These amounts were unsecured, interest bearing (at 10 percent), and payable on demand. The Company recorded the following interest income (expense) amounts related to this activity:

	For the nine months ending September 30,

	2007		2006
Income	$	-	$	11,193
(Expense)		-		(64,422	)

	$	-	$	(53,229	)


		For the quarters ending September 30,

	2007		2006
Income	$	-	$	25
(Expense)		-		(20,783	)

	$	-	$	(20,758	)

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Administrative Charges – The Company uses the administrative staff and facilities of the LLC referred to above. The services provided by the LLC consist primarily of rent, credit, collection, invoicing, payroll and bookkeeping. The Company pays the LLC a fee for these services. The fee is computed as a percentage of accounts receivable purchased by the Company. The administrative fee charged by the LLC was as follows:

For the nine months ending September 30,

2007		2006


$	14,000	$	20,800


	For the quarters ending September 30,

2007		2006


$	-	$	4,300

In connection with the Company’s relocation (See Note 14) to their Charlotte, NC facility, the Company is no longer using the administrative services of the related LLC.

8. EXCHANGE TRANSACTION:

On January 31, 2007, Anchor Funding Services, LLC and its members entered into a Securities Exchange Agreement with BTHC XI, Inc. The members namely, George Rubin, Morry Rubin (“M. Rubin”) and Ilissa Bernstein exchanged their units in Anchor Funding Services, LLC for an aggregate of 8,000,000 common shares of BTHC XI, Inc. issued to George Rubin (2,400,000 shares), M. Rubin (3,600,000 shares) and Ilissa Bernstein (2,000,000 shares). Upon the closing of this transaction Anchor Funding Services, LLC became a wholly-owned subsidiary of BTHC XI, Inc.

At the time of this transaction, BTHC XI, Inc. had no operations and no assets or liabilities. After this transaction the former members of Anchor Funding Services, LLC owned approximately 67.7% of the outstanding common stock of BTHC XI, Inc.

9. EMPLOYMENT AND STOCK OPTION AGREEMENTS:

At closing of the exchange transaction described above, M. Rubin and Brad Bernstein (“B. Bernstein”), the husband of Ilissa Bernstein and President of the Company, entered into employment contracts and stock option agreements with the BTHC XI, Inc. Additionally, at closing two non-employee directors entered into stock option agreements with BTHC XI, Inc.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The following summarizes M. Rubin’s employment agreement and stock options:

·	The employment agreement with M. Rubin retains his services as Co-chairman and Chief Executive Officer for a three-year period.

An annual salary of $1 until, the first day of the first month following such time as BTHC XI, Inc. shall have, within any period beginning on January 1 and ending not more than 12 months thereafter, earned pre-tax net income exceeding $1,000,000, M. Rubin’s base salary shall be adjusted to an amount, to be mutually agreed upon between M. Rubin and BTHC XI, Inc., reflecting the fair value of the services provided, and to be provided, by M. Rubin taking into account (i) his position, responsibilities and performance, (ii) BTHC XI, Inc.’s industry, size and performance, and (iii) other relevant factors. M. Rubin is eligible to receive annual bonuses as determined by BTHC XI, Inc.’s compensation committee. M. Rubin shall be entitled to a monthly automobile allowance of $1,500.

10-year options to purchase 650,000 shares exercisable at $1.25 per share, pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting of the options is one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009, provided that in the event of a change in control or M. Rubin is terminated without cause or M. Rubin terminates for good reason, all unvested options shall accelerate and immediately vest and become exercisable in full on the earliest of the date of change in control or date of M. Rubin’s voluntary termination or by BTHC XI, Inc. without cause.

The following summarizes B. Bernstein’s employment agreement and stock options:

·	The employment agreement with B. Bernstein retains his services as President for a three-year period.

An annual salary of $205,000 during the first year, $220,000 during the second year and $240,000 during the third year and any additional year of employment. The Board may periodically review B. Bernstein’s base salary and may determine to increase (but not decrease) the base salary in accordance with such policies as BTHC XI, Inc. may hereafter adopt from time to time. B. Bernstein is eligible to receive annual bonuses as determined by BTHC XI, Inc.’s compensation committee. B. Bernstein shall be entitled to a monthly automobile allowance of $1,000.

10-year options to purchase 950,000 shares exercisable at $1.25 per share, pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting of the options is one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009, provided that in the event of a change in control or B. Bernstein is terminated without cause or B. Bernstein terminates for good reason, all unvested options shall accelerate and immediately vest and become exercisable in full on the earliest of the date of change in control or date of B. Bernstein’s voluntary termination or by BTHC XI, Inc. without cause.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The following summarizes the non-employee stock option agreements entered into with two directors:

10-year options to purchase 360,000 shares exercisable at $1.25 per share, pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. Vesting of the options is one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009. If either director ceases serving BTHC XI, Inc. for any reason, all unvested options shall terminate immediately and all vested options must be exercised within 90 days after the director ceases serving as a director.

The following summarizes the employee stock option agreements entered into with two managerial employees:

10-year options to purchase 10,000 shares exercisable at $1.25 per share, pursuant to BTHC XI, Inc.’s 2007 Omnibus Equity Compensation Plan. The grant date was September 28, 2007. Vesting of the options is one-fourth on September 28, 2008, one-fourth on September 28, 2009, one-fourth on September 28, 2010 and one-fourth on September 28, 2011. If either employee ceases being employed by BTHC XI, Inc. for any reason, all vested and unvested options shall terminate immediately.

The following table summarizes information about stock options as of September 30, 2007:

				Weighted Average
Exercise		Number		Remaining	Number
Price		Outstanding		Contractual Life	Exercisable

$	1.25		1,970,000	10 years		653,000

BTHC XI, Inc. recorded the issuance of these optionsin accordance with SFAS No. 123(R). The following information was input into a Black Scholes option pricing model to compute a per option price of $.0468:


Exercise price	$	1.25
Term	10 years
Volatility		2.5
Dividends		0	%
Discount rate		4.75	%

The financial effect of these options to record over their life is as follows:


Options to value		1,970,000
Option price	$	0.0468
Total expense to recognize over
life of options	$	92,196

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The amounts recorded for these options in the statement of operations for the nine months and quarter ended September 30, 2007 and 2006 as follows:

	For the nine			For the quarter
	months ended			ended
	September 30, 2007			September 30, 2007


Pre-tax effect	$	61,152		$	11,466
Tax benefit (34%)		(21,000	)		(4,000	)

After-tax effect	$	40,152		$	7,466

The pre-tax effect recorded in the financial statements for the nine months ending September 30, 2007 consists of $30,576 in fully vested stock options and a provision of $30,576 to record eight months of the unvested portions of stock options that will eventually vest on February 28, 2008 and 2009.

10. SALE OF CONVERTIBLE PREFERRED STOCK:

From February 1, 2007 to April 5, 2007 the Company sold 1,342,500 shares of convertible preferred stock to accredited investors. The gross proceeds, transaction expenses and net proceeds of these transactions were as follows:

Gross proceeds	$	6,712,500

Cash fees:
Placement agent		(951,483	)
Legal and accounting		(218,552	)
Blue sky		(39,348	)
Net cash proceeds	$	5,503,117

Non-cash fees:
Placement agents fees - warrants		(62,695	)

Net proceeds	$	5,440,422

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

The placement agent was issued warrants to purchase 1,342,500 shares of the Company’s common stock. The following information was input into a Black Scholes option pricing model to compute a per option price of $.0462:


Exercise price	$	1.10
Term	5 years
Volatility		2.5
Dividends		0	%
Discount rate		4.70	%

The following table summarizes information about stock warrants as of September 30, 2007:


		Weighted Average
Exercise	Number	Remaining	Number
Price	Outstanding	Contractual Life	Exercisable

$1.10	1,342,500	5 years	1,342,500

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

11.CONCENTRATIONS:

Revenues – The Company recorded revenues from United States companies in the following industries as follows:


Industry	For the nine months ending September 30,

	2007		2006

Staffing	$	214,831	$	141,309
Transportation		7,209		104,260
Publishing		2,997		20,438
Construction		8,559		237,802
Service		55,298		9,556
Other		8,846		5,970


	$	297,740	$	519,335


Industry	For the quarters ending September 30,

	2007		2006

Staffing	$	79,632	$	56,722
Transportation		1,132		38,789
Publishing		1,592		7,376
Construction		3,540		0
Service		31,786		5,083
Other		4,314		1,892


	$	121,996	$	109,862

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

Major Customers – The Company had the following transactions and balances with unrelated customers (3 for the nine months ending September 30, 2007 and 3 for the nine months ending September 30, 2006) which represent 10 percent or more of its revenues for the nine months September 30, 2007 and 2006 as follows:

	For the nine months ended September 30, 2007

Revenues	$	45,500	$	45,000	$	50,100

			As of September 30,2007
Purchased accounts
receivable outstanding	$	156,500	$	152,500	$	270,100

		For the nine months ended September 30, 2006

Revenues	$	87,200	$	68,900	$	228,100

		As of September 30,2006
Purchased accounts
receivable outstanding	$	258,300	$	237,700	$	-

Cash – The Company maintains cash deposits with a bank. At various times throughout the year, these balances exceeded the federally insured limit of $100,000.

12.SUPPLEMENTAL DISCLOSURES OF CASH FLOW:

Cash paid for interest for the nine months ended September 30, 2007 and 2006 was $27,000 and $147,000 respectively.

Non-cash financing and investing activities consisted of the following:

8,000,000 shares of common stock were issued in exchange for 100,000 membership units of Anchor Funding Services, LLC (see Note 8).

1,970,000 stock options were issued to the Company’s President, CEO, two managerial employees and two non-employee directors (see Note 9).

1,342,500 stock warrants were issued to the placement agent handling the sale of the Company’s convertible preferred stock (see Note 10).

13.INCOME TAXES:

The income tax benefit for the nine months ending September 30, 2007 consists of the change in deferred income taxes related to the issuance of stock options (See Note 9). There is no current income tax liability for the period.

The net operating loss carryforward generated in the nine months ending September 30, 2007 was approximately $474,000. The deferred tax asset related to this net operating loss carryforward is approximately $161,000. This deferred tax asset has been reduced by a $161,000 valuation allowance. Management is uncertain if this net operating loss will ever be utilized, therefore it has been fully reserved. The change is the valuation reserve from December 31, 2006 to September 30, 2007 is $161,000.

ANCHOR FUNDING SERVICES, INC

Notes To Consolidated Financial Statements

Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

14. FACILITY LEASES

In May 2007, the Company executed lease agreements for office space in Charlotte, NC and Boca Raton, FL. Both lease agreements are with unrelated parties.

The Charlotte lease is effective on August 15, 2007, is for a twenty-four month term and includes an option to renew for an additional three year term at substantially the same terms. The monthly rental is approximately $1,500.

The Boca Raton lease is expected to be effective on August 20, 2007 and is for a sixty-one month term. The monthly rental is approximately $8,300.

15.RECLASSIFICATION:

Certain amounts in the December 31, 2006 balance sheet have been reclassified to conform to their September 30, 2007 presentation. These reclassifications do not change operating results for the nine or three months ended September 30, 2007 or 2006.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and plan of operation together with our consolidated financial statements and the related notes appearing at the end of this Registration Statement. Some of the information contained in this discussion and analysis or set forth elsewhere in this Registration Statement, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Registration Statement for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

This Form 10-QSB contains forward-looking statements. These statements relate to our expectations for future events and future financial performance. Generally, the words “anticipate,” “expect,” “intend” and similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, and future events and circumstances could differ significantly from those anticipated in the forward-looking statements. These statements are only predictions. Actual events or results may differ materially. Factors which could affect our financial results are described in the “Risk Factors” included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results or to changes in our expectations.

Executive Overview

Anchor Funding Services, LLC was founded in January 2003. Anchor’s business has grown with limited marketing and financing. Our objective is to create a well-recognized, national financial services firm for small businesses providing accounts receivable funding (factoring), outsourcing of accounts receivable management including collections and the risk of customer default and other specialty finance products including, without limitation, purchase order financing, trade finance, government contract funding and lawsuit financing. For certain service businesses, Anchor also provides back office support including payroll, payroll tax compliance and invoice processing services. We provide our services to clients nationwide. We plan to achieve our growth objectives through a combination of strategic and add-on acquisitions of other factoring and specialty finance firms that serve small businesses in the United States and Canada and internal growth through mass media marketing initiatives. Our corporate headquarters and back office operations are located in Charlotte, North Carolina.

Summary of Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to credit provisions, intangible assets, contingencies and litigation and income taxes. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, reflect the more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition – The Company charges fees to its customers in one of two ways as follows:

1) Fixed Transaction Fee. Fixed transaction fees are a fixed percentage of the purchased invoice. This percentage does not change from the date the purchased invoice is funded until the date the purchased invoice is collected.

2) Variable Transaction Fee. Variable transaction fees are variable based on the length of time the purchased invoice is outstanding. As specified in its contract with the client, the Company charges variable increasing percentages of the purchased invoice as time elapses from the purchase date to the collection date.

Under the cost recovery method, all revenue is recognized upon collection of the entire amount of purchased accounts receivable.

For established customers the Company uses the accrual method of accounting. The Company applies this method by multiplying the historical yield, for each customer, times the amount advanced on each purchased invoice outstanding for that customer, times the portion of a year that the advance is outstanding. The customers’ historical yield is based on the Company’s last nine months of experience with the customer along with the Company’s experience in the customer’s industry, if applicable.

Retained Interest in Purchased Accounts Receivable –Retained interest in purchased accounts receivable represents the gross amount of invoices purchased from factoring customers less amounts maintained in a reserve account. The Company purchases a customer’s accounts receivable and advances them a percentage of the invoice total. The difference between the purchase price and amount advanced is maintained in a reserve account. The reserve account is used to offset any potential losses the Company may have related to the purchased accounts receivable.

Management considered approximately $22,000 of their September 30, 2007 retained interest in purchased accounts receivable to be uncollectible. Management did not consider any of the December 31, 2006 retained interest in purchased accounts receivable to be uncollectible.

Management believes the fair value of the retained interest in purchased accounts receivable approximates its recorded value.

Property and Equipment – Property and equipment, consisting furniture and fixtures and computers and software, are stated at cost.Depreciation is provided over the estimated useful lives of the depreciable assets using the straight-line method. Estimated useful lives range from 2 to 5 years.

Advertising Costs – The Company charges advertising costs to expense as incurred. Total advertising costs were as follows:

For the nine months ending September 30,
2007			2006
	$	151,700		$	48,700

For the quarters ending September 30,
2007			2006
	$	64,800		$	17,200

Recent Accounting Pronouncements -

SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of the fiscal year, has not yet issued financial statements for any interim period of such year, and also elects to apply the provisions of SFAS No. 159. The Company is currently evaluating the impact of SFAS 159 on its results of operations and financial condition.

Cash and cash equivalents – Cash and cash equivalents consist primarily of highly liquid cash investment funds with original maturities of three months or less when acquired.

Results of Operations

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

Finance revenues for the three months ended September 30, 2007 were $121,996 compared to $109,862 for the three months ended September 30, 2006 (an 11% increase). The change in revenue was due to increased purchases from certain clients.

Interest income (expense), net for the three months ended September 30, 2007 was $50,957 compared to $(35,518) for the three months ended September 30, 2006. Beginning in February 2007, the Company began using the proceeds from the sale of Series 1 Preferred Stock to fund its acquisition of accounts receivable instead of borrowing from its lender. This combined with the interest earned on the excess cash on hand, resulted in net interest income for the three months ended September 30, 2007.

Provision for credit losses for the three months ended September 30, 2007 was $22,000 compared to $0 for the three months ended September 30, 2006.

Operating expenses for the three months ended September 30, 2007 were $380,074 compared to $48,078 for the three months ended September 30, 2006 (a 690.5% increase). This increase is primarily attributable to the Company’s incurring additional costs for increased payroll, marketing, professional, rent, insurance and other operating expenses to grow Anchor’s core business, build an infrastructure to support anticipated growth and operate as a publicly reporting company. In addition, the Company began leasing its own offices in Charlotte on June 1, 2007 and opened an Executive and Sales office in Boca Raton, Florida in August, 2007. Management expects that its operating expenses for 2007 (annualized) will be at least $1 million more than the 2006 (annual) operating expenses.

Management received no compensation for the three months ended September 30, 2006. For the three months ended September 30, 2007 management compensation was $75,500.

Net income (loss) before income taxes for the three months ended September 30, 2007 was $(225,121) compared to $26,266 for the three months ended September 30, 2006. The decrease in net income before income taxes is the result of increases in finance revenues ($12,134) and interest income, net ($86,475) being offset by an increase in operating costs ($331,996).

The following table compares the operating results for the three months ended September 30, 2007 and September 30, 2006:

	Three Months Ended September 30,
	2007			2006			$ Change			% Change
Finance revenues	$	121,996		$	109,862		$	12,134			11.0
Interest income (expense), net		50,957			(35,518	)		86,475			-
Net finance revenues		172,953			74,344			98,609			132.6
Provision for credit losses		22,000			-			22,000			-
Finance revenues, net of interest expense and credit losses		150,953			74,344			76,609			127.3
Operating expenses		380,074			48,078			331,996			690.5
Net income (loss) before income taxes		(229,121	)		26,266			(255,387	)		-
Income tax benefit:		4,000			-			4,000			-
Net income (loss)	$	(225,121	)	$	26,266		$	(251,387	)		-

Finance revenue. Finance revenues for the three months ended September 30, 2007 were $121,996 compared to $109,862 for the three months ended September 30, 2006 (an 11% increase). Anchor had 16 clients as of September 30, 2007 compared to 15 clients as of September 30, 2006.

Interest income (expense). Anchor had net interest income of $50,957 for the three months ended September 30, 2007 compared to net interest expense of $(35,518) for the three months ended September 30, 2006. Beginning in February 2007, the company began using the proceeds from the sale of Series 1 Preferred Stock to fund its clients instead of borrowing from its lender. This combined with the interest earned on the excess cash on hand, resulted in net interest income for the three months ended September 30, 2007.

Provision for credit losses. Anchor has reviewed its portfolio of accounts receivable purchased and determined that it had $22,000 of credit losses for the three months ended September 30, 2007 and $0 credit losses for the three months ended September 30, 2006.

Operating expenses. Operating expenses are primarily selling, general and administrative (“SG&A”) expenses. Operating expenses for the three months ended September 30, 2007 increased by $331,966, compared to the three months ended September 30, 2006. This increase is primarily attributable to the company’s incurring additional costs for increased payroll, marketing, professional and other operating expenses to grow Anchor’s core business and build an infrastructure to support anticipated growth. Since January 31, 2007, the Company is incurring additional costs for increased payroll, marketing, professional, rent, insurance and other operating expenses to grow Anchor’s core business, build an infrastructure to support anticipated growth and operate as a publicly reporting company. In addition, the Company began leasing its own offices in Charlotte on June 1, 2007 and opened an Executive and Sales office in Boca Raton, Florida in August, 2007. Management expects that its operating expenses for 2007 (annualized) will be at least $1 million more than the 2006 (annual) operating expenses.

Client Accounts

As of and for the three months ended September 30, 2007, we have four clients that together account for at least 74.1% of our accounts receivable portfolio and 74.2% of our revenues. The transactions and balances with these clients as of and for the three months ended September 30, 2007 is summarized below:

	Percentage of Accounts			Percentage of Revenues
	Receivable Portfolio			For The Three Months
Entity	As Of September 30, 2007			September 30, 2007

Staffing Company in New Jersey		24.9	%		28.5	%
Medical Staffing Company in New York		18.5	%		15.1	%
Medical Staffing Company in New York		14.0	%		16.5	%
Intellectual Technology Consulting Firm in Maryland		16.7	%		14.1	%

A client’s fraud could cause us to suffer material losses.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006

Finance revenues for the nine months ended September 30, 2007 were $297,740 compared to $519,335 for the nine months ended September 30, 2006 (a 42.7% decrease). The change in revenue was primarily due to a client that provided Anchor with approximately $239,239 in finance revenues during the nine months ended September 30, 2006 and no revenues in 2007.

Interest income (expense), net for the nine months ended September 30, 2007 was $127,121 compared to $(173,793) for the nine months ended September 30, 2006. Beginning in February 2007, the Company began using the proceeds from the sale of Series 1 Preferred Stock to fund its clients instead of borrowing from its lender. This combined with the interest earned on the excess cash on hand, resulted in net interest income for the nine months ended September 30, 2007.

Provision for credit losses for the nine months ended September 30, 2007 was $22,000 compared to $0 for the nine months ended September 30, 2006.

Operating expenses for the nine months ended September 30, 2007 were $939,530 compared to $152,954 for the nine months ended September 30, 2006 (a 513.6% increase). This increase is primarily attributable to the Company’s incurring additional costs for increased payroll, marketing, professional, rent, insurance and other operating expenses to grow Anchor’s core business, build an infrastructure to support anticipated growth and operate as a publicly reporting company. In addition, the Company began leasing its own offices in Charlotte on June 1, 2007 and opened an Executive and Sales office in Boca Raton, Florida in August, 2007. Management expects that its operating expenses for 2007 (annualized) will be at least $1 million more than the 2006 (annual) operating expenses.

Management received no compensation for the nine months ended September 30, 2006. For the nine months ended September 30, 2007 management compensation was $175,500.

Net income (loss) before income taxes for the nine months ended September 30, 2007 was $(515,669) compared to $192,588 for the nine months ended September 30, 2006. The decrease in net income before income taxes is the result of decreases in finance revenues ($221,595) and increases in operating costs ($786,576) being offset by an increase in interest income, net ($300,914). The change in revenue was primarily due to a client that provided Anchor with approximately $239,239 in finance revenues during the nine months ended September 30, 2006 and no revenues in 2007.

The following table compares the operating results for the nine months ended September 30, 2007 and September 30, 2006:

	Nine Months Ended September 30,
	2007			2006			$ Change			% Change
Finance revenues	$	297,740		$	519,335		$	(221,595	)		(42.7	)
Interest income (expense), net		127,121			(173,793	)		300,914			-
Net finance revenues		424,861			345,542			79,319			22.9
Provision for credit losses		22,000			-			22,000
Finance revenues, net of interest expense and credit losses		402,861			345,542			57,319			21.8
Operating expenses		939,530			152,954			786,576			513.6
Net income (loss) before income taxes		(536,669	)		192,588			(729,257	)		-
Income tax benefit:		21,000			-			21,000			-
Net income (loss)	$	(515,669	)	$	192,588		$	(708,257	)		-

Finance revenue. The decrease in finance revenue was primarily due to a client that provided Anchor with approximately $239,239 in finance revenues during the nine months ended September 30, 2006 and no revenues in 2007. Anchor had 16 clients as of September 30, 2007 compared to 15 clients as of September 30, 2006.

Interest income (expense). Anchor had net interest income of $127,121 for the nine months ended September 30, 2007 compared to net interest expense of $173,793 for the nine months ended September 30, 2006. Beginning in February 2007, the company began using the proceeds from the sale of Series 1 Preferred Stock to fund its clients instead of borrowing from its lender. This combined with the interest earned on the excess cash on hand, resulted in net interest income for the nine months ended September 30, 2007.

Provision for credit losses. Anchor has reviewed its portfolio of accounts receivable purchased and determined that it had $22,000 of potential credit losses for the nine months ended September 30, 2007 and $0 potential credit losses for the nine months ended September 30, 2006.

Operating expenses. Operating expenses are primarily selling, general and administrative (“SG&A”) expenses. Operating expenses for the nine months ended September 30, 2007 increased by $786,576 compared to the nine months ended September 30, 2006. This increase is primarily attributable to the company’s incurring additional costs for increased payroll, marketing, professional and other operating expenses to grow Anchor’s core business and build an infrastructure to support anticipated growth. Since January 31, 2007, the Company is incurring additional costs for increased payroll, marketing, professional, rent, insurance and other operating expenses to grow Anchor’s core business, build an infrastructure to support anticipated growth and operate as a publicly reporting company. In addition, the Company began leasing its own offices in Charlotte on June 1, 2007 and opened an Executive and Sales office in Boca Raton, Florida in August, 2007. Management expects that its operating expenses for 2007 (annualized) will be at least $1 million more than the 2006 (annual) operating expenses.

Key changes in certain selling, general and administrative expenses:

	Nine Months Ended September 30,
	2007		2006		$ Change		Explanation
Professional fees	$	123,669	$	11,040	$	112,629	Increased cost for 2006 and 2005 audits. Additional legal fees for corporate matters and SEC filings
Payroll, payroll taxes and benefits		323,250		52,503		276,081	Increased payroll and health benefits for President and other corporate staff. Increased health benefits for CEO and a Director.
Advertising		151,131		48,740		102,341	Increased marketing
Consulting expense		25,000		-		25,000	Monthly advisory fee to investment banking firm for acquiring other companies
Insurance		54,664		-		54,664	Premiums for insurance policies including Directors and Officers and fidelity policies
	$	677,714	$	112,283	$	570,765

Liquidity and Capital Resources

Cash Flow Summary

Cash Flows from Operating Activities

Net cash used by operating activities was $1,166,455 for the nine months ended September 30, 2007 and was primarily due to our net loss for the period and cash used in acquiring operating assets, primarily to purchase accounts receivable. The net loss was $515,669 for the nine months ended September 30, 2007. Cash used for operating assets and liabilities was primarily due to an increase of $752,814 in retained interest in accounts receivable. Increases and decreases in prepaid expenses, accounts payable, accrued payroll and accrued expenses were primarily the result of timing of payments and receipts.

Net cash provided by operating activities was lower for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006. This is the result of a net loss ($515,669) for the nine months ended September 30, 2007 compared to net income ($192,588) for the nine months ended September 30, 2006, a reduction in retained interest in purchased accounts receivable ($298,884) and collections on a related party loan ($213,474).

Cash Flows from Investing Activities

For the nine months ended September 30, 2007, net cash used in investing activities was $85,367 for the purchase of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $5,455,964 for the nine months ended September 30, 2007. This was primarily the result of $6,712,500 of proceeds from the sale of Preferred Stock offset by $1,209,383 of payments related to costs of the sale.

Between January 31, 2007 and April 5, 2007, we raised $6,712,500 in gross proceeds from the sale of 1,342,500 shares of our Series 1 Convertible Preferred Stock to expand our operations both internally and through possible acquisitions as more fully described under “Description of Business.”

Capital Resources

We previously had the availability of a $1 million line of credit through September 5, 2007 with an institutional asset based lender which advanced funds against “eligible accounts receivable” as defined in Anchor’s agreement with its institutional lender. This facility, which was secured by our assets, contained certain covenants related to tangible net worth and change in control. In the event that we failed to comply with the covenant(s) and the lender did not waive such non-compliance, we would have been in default of our credit agreement, which could have subjected us to penalty rates of interest and accelerate the maturity of the outstanding balances. On June 28, 2007, we notified our lender of our desire to terminate the facility agreement immediately and the lender subsequently agreed to our request. Prior to us completing any significant acquisitions, for the success of which no assurances can be given, we intend to seek to obtain a new credit facility and attempt to obtain better lending terms. In the event we are not able to obtain adequate credit facilities for our factoring and acquisition needs on commercially reasonable terms, our ability to operate our business and complete one or more acquisitions would be significantly impacted and our financial condition and results of operations could suffer. As of September 30, 2007, we have no line of credit.

We are not reliant on loans from related parties. Based on our current cash position, we believe can meet our cash needs for the next 12 to 18 months and support our anticipated organic growth. In the event we acquire another company, particularly one with a large cash purchase price, we may need additional financing to complete the transaction and our daily cash needs and liquidity could change based on the needs of the combined companies. At that time, in the event we are not able to obtain a sufficient line of credit to complete the acquisition (if needed) and to operate the combined companies financing needs on commercially reasonable terms, our ability to operate our business would be significantly impacted and our financial condition and results of operations could suffer.

ITEM 3. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level at the end of our most recent quarter. There have been no changes in the Company's disclosure controls and procedures or in other factors that could affect the disclosure controls subsequent to the date the Company completed its evaluation. Therefore, no corrective actions were taken.

Management has not yet completed, and is not yet required to have completed, its assessment of the effectiveness of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, as amended.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS:

As of the filing date of this Form 10-QSB, we are not a party to any pending legal proceedings.

ITEM 2. CHANGES IN SECURITIES.

(a) For the nine months ended September 30, 2007, there were no sales of unregistered securities, except as reported in our Form 10-SB, as amended.

(b) Rule 463 of the Securities Act is not applicable to the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS:

Not applicable.

ITEM 5. OTHER INFORMATION:

In November 2007, the OTC Bulletin Board approved of the Company’s Common Stock trading under the symbol “AFNG.”

ITEM 6. EXHIBITS:

Except for the exhibits listed below as filed herewith or unless otherwise noted, all other required exhibits have been previously filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, on Form 10-SB, as amended (file no.0-52589).

Exhibit

Number Description

2.1	Exchange Agreement

3.1	Certificate of Incorporation-BTHC,INC.

3.2	Certificate of Merger of BTHC XI, LLC into BTHC XI, Inc.

3.3	Certificate of Amendment

3.4	Designation of Rights and Preferences-Series 1 Convertible Preferred Stock

3.5	Amended and Restated By-laws

4.1	Form of Placement Agent Warrant issued to Fordham Financial Management

10.1	Directors’ Compensation Agreement-George Rubin

10.2	Employment Contract-Morry F. Rubin

10.3	Employment Contract-Brad Bernstein

10.4	Agreement-Line of Credit

10.5	Fordham Financial Management-Consulting Agreement

10.6	Facilities Lease – Florida

10.7	Facilities Lease – North Carolina

10.8	Second Facilities Lease-North Carolina (1)

31.1		Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification *

31.2		Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification *

32.1		Chief Executive Officer Section 1350 Certification *

32.2		Chief Financial Officer Section 1350 Certification *

99.1	2007 Omnibus Equity Compensation Plan

99.2	Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan

99.3	Press Release – Third Quarter Earnings*

______________

*Filed herewith

(1) Incorporated by reference to the Registrant’s Form 10-QSB/A for the quarter ended June 30, 2007.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ANCHOR FUNDING SERVICES, INC.

Date: November 19, 2007	By:	/s/ Morry F. Rubin
		Morry F. Rubin
		Chief Executive Officer


Date: November 19, 2007	By:	/s/ Brad Bernstein
		Brad Bernstein
		President and Chief Financial Officer

ex311.htm

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Morry F. Rubin, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of Anchor Funding Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer (if any) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


DATE: November 19, 2007	By:	/s/ MORRY F. RUBIN
		Morry F. Rubin
		Chief Executive Officer

ex312.htm

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Brad Bernstein, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of Anchor Funding Services, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


DATE: November 19, 2007	By:	/s/ BRAD BERNSTEIN
		Brad Bernstein
		President and Chief Financial Officer

ex321.htm

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18U.S.C. SECTION 1350

In connection with the Quarterly Report of Anchor Funding Services, Inc. (the “Company”) on Form 10-QSB for the period ending September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Morry Rubin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


	By:	/s/ MORRY F. RUBIN
		Morry F. Rubin
		Chief Executive Officer
		November 19, 2007

ex322.htm

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18U.S.C. SECTION 1350

In connection with the Quarterly Report of Anchor Funding Services, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brad Bernstein, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


	By:	/s/ BRAD BERNSTEIN
		Brad Bernstein,
		President and Chief Financial Officer
		November 19, 2007

ex993.htm

FOR IMMEDIATE RELEASE – November 19, 2007

Anchor Funding Services, Inc. reports third quarter results, launches expansion programs in the accounts receivable Factoring industry and OTC Bulletin Board trading symbol.

Boca Raton, Fl. (PR Newswire)/ Nov 19, 2007 - Anchor Funding Services, Inc. (OTC Bulletin Board Symbol “AFNG”) announced today its third quarter results ended September 30, 2007. The company reported third quarter finance revenues and net loss of $121,966 and $(225,121) as compared to revenues and net income of $109,862 and $26,266 for the comparable prior year period. The net loss is attributable to the company’s investments in launching various sales initiatives, hiring marketing and operations personnel, an increase in general and administrative costs and compliance costs as a public reporting company. Anchor reported that the OTC Bulletin Board has approved Anchor for trading under the symbol “AFNG.”

Morry F. Rubin, CEO stated that “since having completed our private placement on April 5, 2007 we have begun to make investments to capitalize on the growth opportunity in the U.S. factoring industry. While ramping up our organic growth initiatives we are also exploring acquisition opportunities of other U.S. factoring firms which would enhance our ability to increase revenues and profits, add additional factoring services and increase our geography and clients. “

Factoring is the purchase of a company’s accounts receivable, which provides businesses with critical working capital so they can meet their operational costs and obligations while waiting to receive payment from their customers. This is particularly important for small businesses experiencing rejections and delays from banks which are increasingly tightening their credit requirements.

Anchor may provide funding to businesses where the performance of a service or the delivery of a product can be verified. We have the ability to check a company’s credit and evaluate its ability to pay across most industries. Typically, small businesses do not have adequate resources to manage the credit and A/R collection functions internally and cannot afford to provide their customers extended credit terms.

Factoring as it functions today has been in existence for nearly 200 years. Its historical focus has been in the textile,furniture and apparel industries, which provides products to major retailers. The factoring industry has expanded beyond the textile and apparel industries into other mainstream businesses. According to the Commercial Finance Association, the factoring Industry achieved U.S. revenues of $ 127 billion in 2006.

Mr. Rubin also stated that “within our industry we are targeting specific sectors which demonstrate high demand for factoring services such as, transportation, and recently launched a dedicated transportation finance division, TruckerFunds.com. TruckerFunds.com purchases freight bills from small fleets and owner/operators across the U.S. We are excited about our future expansion opportunities for 2008 and beyond in the factoring industry which is highly fragmented and not dominated by any single firm(s). We will continue to communicate important developments as they occur. “

About Anchor

Anchor provides innovative accounts receivable funding to small U.S businesses. Our funding facility, which is based upon creditworthiness of accounts receivable, provides rapid and flexible financing to support small businesses’ daily capital needs.

Additional Information

For additional information, a copy of Anchor’s Form 10-QSB can be obtained on the Internet by going to www.sec.gov, clicking “Search for Company filings,” then clicking “Companies & Other Filers,” typing in our company name and clicking “find Companies.”

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.

Certain statements in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performances or achievements express or implied by such forward-looking statements. The forward-looking statements are subject to risks and uncertainties including, without limitation, changes in levels of competition, possible loss of customers, and the company’s ability to attract and retain key personnel.

Contact Morry F. Rubin, Chairman and C.E.O (866) 950- 6664 EXT 302

Email: Mrubin@anchorfundingservices.com